Exciting Europe ETF as EU Rebound Continues

MarketsETF Trends

This article was originally published on ETFTrends.com.

With local economies throughout the region rebounding, the European Union (EU) is expected to post another year of solid growth, potentially providing investors with compelling opportunities along the way. Those factors could increase the allure of the Direxion Daily FTSE Europe 3x Bull Shares (NYSEArca: EURL) for short-term traders.

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EURL tries to deliver triple the daily performance of the FTSE Developed Europe All Cap Index, a benchmark that tracks large-, mid- and small-cap companies throughout developed Europe.

“The European Union is experiencing an unfamiliar optimism as 2018 takes shape and the Euro begins to show signs of an upswing against a falling dollar, pound and renminbi,” said Direxion in a recent note. “A large part of the enthusiasm in Europe comes from the fact that the European Union’s 19 member nations posted a combined GDP growth of 2.5 percent over 2017. Suddenly, for the first time in a long time, everything’s coming up Eurozone.”

The economic growth in the Eurozone hitting its highest level in almost seven years was attributed to near-record expansion of manufacturing production and the steepest increase in service sector activity in over six-and-a-half years, according to MET Newswires.

IHS Markit revealed that its purchasing manager index spiked to 58.1 in December from the previous month’s 57.5, according to the Associated press. The Eurozone economy has withstood headwinds, largely heightened political risks in an election packed year, and managed to push through solid growth for 2017.

“What is it that the EU has done so well to have their best year of economic growth since 2007? The answer, surprisingly, is: not much,” said Direxion. “Mismatched ruling parties and austerity measures aside, the biggest asset the European Union has recently had over its global contemporaries is simply exhibiting a measure of stability. Brexit is the most obvious example of the European mainland’s relative constancy.”

EURL's underlying index does not focus exclusively on Eurozone economies. The benchmark allocates over 32% of its combined weight to the U.K. and Switzerland. Germany and France, the Eurozone's two largest economies, also combine for 32% of the fund's weight.

Strengthening European banks also bolster the case for the region's equity and fixed income assets.

“European financials stand to come out very appealing as national bond prices between the member nations begin closing ranks. That, in addition to signs of stability in the once failing Greek economy, have made the EU look almost serene when compared to the volatile hysterics overlaying U.S. markets,” according to Direxion.

For more information on European markets, visit our Europe category.

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